L’essence de la stratégie

Trading is a subjective subject, it means something different to everyone.

This article is part of the Channeling series.

There are some new elements that I have spotted that can clarify things a bit.

On the image below the ripples are the epicentre of the channeling move.

What transpired prior was a mean reversion, but since the Green River was not plotted here, we’re not going to discuss that part.

After the ripple effect any point is a good point to buy until the channeling ends, but for optimal entries, consider the 3 3 circle sets.

You should therefore initiate new longs / add to your longs upon the first 3 spikes below the E-16, then the 3 spikes below the E-32, then the 3 spikes below the next EMA, which would normally mean the other side of Mr. Maroon (E-67), but on the example above the E-89 was plotted.

Now, unlike the epicentre of the channeling, the end isn’t so easy to spot.

The last move ended up in a falling knife – see last blog entry.

In general, a stochastic bars hybrid can help to spot the 3 different legs – and more precisely where the last one ended, and with a little practice you may end up finding the faith healers yourself.

On the image below the channeling only got to the second 3-sequence before the falling knife, after which there was no lower low, but one pink was still good for a quick sell.

My suggestion to playing a channeling market is to open positions without stop losses first. Then have a routine click on the first protective stop in gains after 8 hours, and have a smart trail stop take care of the rest.

The last image here is to show that the first set of the stochastic bars started printing. The moratorium of 1.19542 was calculated from the last Send Function’s high, and if price fails here, this is what I call a no break extension: price only coasted higher by a mere fluctuation size = the bus never left the station, just pulled ahead from one end to the other.

(The 3 green circles are the Maroon Fake-outs – see the pink ones earlier.)

Visualize a channel…

The purple dashes are liquidity breaks = hint to fade. Note the divergence on the Aiken Hasi purple line on the bottom between the T-80 thrust and the Thrust/Failed to Close Below.
Stochastic bars group 1, 2, 3.